We’re currently experiencing serious technical problems on the site, and as a result are unable to update the news – even though our market data is running as per normal. We sincerely apologise for any inconvenience caused and hope to be up and running again this evening. Thank you for your patience in this regard.
– David McKay (editor) & team

Cape Town – South African Revenue Service (SARS) commissioner Tom Moyane told Parliament on Tuesday that the unwarranted attacks on the organisation are having a negative impact on the confidence of taxpayers.

“We’ve seen a disturbing trend – tax compliance levels are beginning to deteriorate and we’re already in a dire economic situation that negatively impacts on our collection ability.”

Briefing Parliament’s standing committee on finance on its quarterly performance at the end of December 2016, Moyane came out guns blazing against those who criticise SARS, implying that the revenue collector is unable to fulfil its functions.

“So much has been said about SARS,” Moyane said, “and it’s extremely damaging to us as a leading government agency.”

He said SARS is responsible for 90% of all revenue collection and the “unwarranted and unsubstantial attacks” impact negatively on the institution he leads. “Not only on the institution, but also on the 14 500 men and women working at SARS. Their dedication is unquestionable,” Moyane added.

'Mischievous attitudes' and aspersions of falling apart

He also rubbished reports that SARS has suffered a “loss of technical competence” as is alleged. “We have the ability to lead SARS. What concerns me most are the mischievous attitudes whereby aspersions are cast, implying we’re falling apart.”

Moyane referred MPs to a paragraph in the 2017 Budget Overview which states that collection shortfalls in personal income tax, value-added tax (VAT) and customs duties are down due to a range of factors, such as lower wage increases, higher import costs and lower economic growth.

He said the R30bn shortfall in revenue collection in the previous financial year was due to economic factors and not the organisation’s inability to collect taxes.

“This is not the first time there was a revenue shortfall," he said, adding that SARS also recorded a shortfall in the 2008/09 financial year.

In the presentation on SARS’ quarterly performance that followed, group executive Marius Papenfus said the entity collected R818.7bn for the year to December 31 2016.

The collection figure reflects a surplus of R0.5bn and revenue growth of 7.7% compared to the previous year.

SARS acknowledged that import taxes (both VAT and customs duties), which have been well below projections made during the medium-term budget in October 2015, remain risks to revenue collection.

It ascribed the subdued growth in merchandise import levels to rising import costs and weak domestic activity, which is dampening the demand of consumption and capital goods.

In addition, personal income tax collection is also below expectations, hovering at about 9.4% compared with the required growth rate of 10.4%.

Moyane said the savings in terms of VAT refunds were depleted when the December 2016 backlog was “cleared”, largely in January 2017. This poses a risk to overall revenue collections, according to SARS.

The tax agency recently acknowledged in response to a parliamentary question that there was a delay in the VAT refunds of R19.6m by the end of February 2017.

The total value of VAT refunds still being audited as at February 28 2017 was R17.3bn.

SARS said in its presentation on Tuesday that the backlog in paying out refunds may turn the recorded surplus at the end of December last year into a deficit.

Revenue collection in 2016 fell more than R30bn short of the targets stipulated in last year’s budget – a concern Finance Minister Pravin Gordhan raised ahead of his 2017 Budget Speech.

Gordhan at the time said he was concerned about the administrative and collection abilities at the revenue service and noted that he was meeting with SARS top management on a regular basis.

In addition, National Treasury announced some weeks ago that the significantly lower revenue collection of R30bn necessitates changes to the Income Tax and VAT Acts to ensure smooth tax administration and optimal revenue collection.

Certain sections in South Africa’s tax legislation allow Gordhan to put regulations in place prescribing, among other things, the type of information he needs from the SARS commissioner.